Trump’s nominee to lead the IRS was just busted in major corruption scandal

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Ethical questions have been raised about Chuck Rettig, President Trump’s nominee to head the IRS, after it was revealed he failed to disclose that two rental properties he owns are in Trump-branded properties.

Rettig, who is scheduled to testify today before a Senate committee considering his long-pending confirmation, had disclosed he owned a 50 percent stake in two rental properties in Hawaii, but failed to disclose that they are in the Trump International Hotel Waikiki and Tower.

That missing piece was discovered by Congressional staff who examined his financial disclosure and other statements and was discussed in a due diligence staff meeting on June 21, according to Politico.

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The staff also raised questions about loans made to a family member which were repaid with interest, but not properly declared on Rettig’s tax returns over several years.

Rettig is a Beverly Hills, California, lawyer who has specialized in dealing with tax controversies for clients and is known to have been aggressive about seeking deductions for his wealthy clientele.

The family loans involved three $200,000 loans made in 2014, which were repaid.

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Rettig, according to the staff memo, failed to record interest income on the loans on his tax returns in 2014, 2015 and 2016. However, he did deduct $17,856 in interest expense in 2015.

Rettig has agreed to amend his returns and provide more detail on his properties but it is still expected to raise questions from Senators at the hearing.

Trump nominated Rettig in February to replace former Commissioner John Koskinen, who left after his term ended.

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Rettig is also likely to face questions about how he will transition from trying to get the biggest tax breaks possible for his clients to representing the government interest in collecting all taxes that may be due. 

He also will be asked about the many problems facing the IRS including the implementation of the new tax cuts, constant complaints about customer service, the need to update information technology, and the agency’s shrinking workforce.

Rettig is in many ways an unusual choice to run the huge agency because he has no background in managing a large operation. 

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“If confirmed by the U.S. Senate, he would be the first IRS commissioner in decades to come from the tax world itself,” the Los Angeles Times reported in February, “and he would be tasked with overseeing the agency as it writes scores of rules to implement the new tax law.”

“That will involve hundreds of decisions,” continued the L.A. Times, “ranging from how new tax documents should look to how to precisely define the types of overseas corporate earnings that will be subject to taxation, said Mark Mazur, director of the nonpartisan Tax Policy Center.”

Rettig, described as gregarious and outgoing, also will have to try and improve relations between the IRS and Congress, which have deteriorated in recent years over issues like whether Tea Party members were unfairly targeted for auditing (they were not).

He also has an unusual interest in magic and is a member of the Academy of Magic Arts which runs the Magic Castle in Hollywood, a restaurant and  hotel where magicians provide entertainment outside of the world of film and TV. 

Rettig will need to pull some of those tricks out of his hat as he manages a workforce of nearly 78,000 people, which has shrunk by about 14 percent since 2012 – raising questions about whether there are enough workers to handle the job.

Treasury Secretary Steven Mnuchin, to whom Rettig will report, has said he wants to hire more people at the IRS but the Republicans who control the budget could block that.

First, Rettig must explain away his failure to note he owns rental properties in a place where the Trump family makes royalties, which is a blatant conflict he should have disclosed in the first place. 

However, with a Republican majority on the committee and in the Senate, it is likely Rettig will soon be at work figuring out what Trump’s tax cut for the rich will really look like to the ordinary citizens of America.

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Benjamin Locke

Benjamin Locke is a retired college professor with an undergraduate degree in Industrial Labor and Relations from Cornell University and an MBA from the European School of Management.

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